Persimmon’s latest results follow bank rate rise

PERSIMMON will unveil results for the first half of the year next week, with investors keen to hear the management’s view on whether the recent increase in interest rates is starting to impact sales.

The housebuilder will say that revenue rose by 5% to £1.84bn in the six months to June 30, with the Charles Church operator having in July pointed to “resilient” consumer confidence.

But City analysts believe that the Bank of England’s recent decision to raise interest rates from 0.5% to 0.75% could start to impact the housing market.

George Salmon, equity analyst at Hargreaves Lansdown, said: “Investors will be waiting to see if the Monetary Policy Committee’s decision to raise interest rates at the beginning of August has impacted Persimmon’s selling power.

“Mortgage approval rates for July showed another month of growth; an indicator that the firsttime buyers Persimmon relies heavily on are continuing to find their way on to the property ladder.”

At its last trading update, Persimmon said it completed 8,072 house sales – up 3.6% on a year earlier – of which around 4,900 were private sales.

The average selling price of private homes lifted 2% to around £236,700.

It also said that it had a “strong platform to achieve further growth in the second half”, with forward sales 5% higher at £1.68bn.

The group posted half-year pretax profit of £457.4m in 2017.

Graham Spooner, investment research analyst at The Share Centre, said: “The last update in early July was seen as reassuring, given the backdrop of economic uncertainty and rising interest rates.

“The market’s focus in this update will be on profit margins, as the company said previously that it expected some improvement in the underlying housing margin in the first half.”

Persimmon also continues to be dogged by the controversy surrounding excessive pay for top bosses.

Earlier this month, the housebuilder’s chief executive, Jeff Fairburn, was named top of a High Pay Centre list of the 10 highestpaid bosses in 2017.

Mr Fairburn’s £47m salary is around 3,000 times more than Persimmon’s lowest-paid worker.

The company has also been criticised for agreeing pay deals for a string of top bosses worth more than £100m.

The group saw 48.5% of investors vote against the pay plans in April as they vented anger over a £75m payout for Mr Fairburn.